Historically, due to the uncertainty of certain industry-level business conditions, business entities have largely managed for short-term competitiveness. Competitive changes that have been instituted, such as cost-reduction and technology enhancements, have mostly resulted in incremental changes to the business entity rather than transformational changes.
In the last several years, in order to effect a long-term strategic and competitive vision, industry analysts have been advocating that business entities move towards the concept of a “real-time enterprise.” Although given slightly varying definitions throughout industry, a real-time enterprise may be defined as an organization that leverages technology in order to reduce the time between when data is recorded in a system and when it is available for information processing. Essentially, a real-time enterprise strives to reduce the time taken for critical business processes by providing the relevant information to its decision-makers as soon as possible. Reducing the time that it takes for up-to-date critical business information to reach the decision-maker dramatically increases the effectiveness of the decision that he or she makes.
The importance of becoming a real-time enterprise may be applied across all industries. For example, in the banking industry, banks are liable for heavy fines and penalties if found not to be in compliance with laws requiring minimum cash ratios. In order to evaluate and preclude non-compliance, the current state of financials and critical ratios should be available throughout the day for immediate notification and mediation of problems before they exceed regulatory tolerances. Similarly, in the airline industry, critical performance metrics such as airline operations, sales and marketing, and corporate financials must be assessed continuously. Critical operations that require immediate, actionable information might include response to flight incidents, mechanical failures and repair times, and route/reroute management required for bad weather and/or similar unexpected events. Likewise, in the health insurance industry, a major health event can result in a significant claim to the insurance provider. Immediate information about the associated cost and future impact of cash flow is an important part of the provider's risk management program.
While the benefits of becoming a real-time enterprise are readily understood, the demands on a business to move towards this real-time enterprise concept are tremendous. The forces of short-term competitiveness as well as the requirements under recent legislation such as the Sarbanes-Oxley legislation in the United States, which requires, inter alia, real-time reporting of events that affect a public company's financial situation as well as operational ‘transparency,’ and the similar Basel II law in Europe, Australia and Canada, are pushing both business and technology to maintain pace and adapt to exponential rates of change. Furthermore, the complexities of aligning the various functions, processes, and business units of a business entity, as well as the associated costs and business cultural, or institutionalized, thinking within the entity, may appear insurmountable. For example, referring back to the banking industry example, while having up-to-date information on the status of the minimum cash ratio balance for financial institution is crucial, the information is extremely dynamic and fluctuates daily in response to customer activities such as promotions and loan approvals, as well as in response to market swings and interest rate changes. In the health insurance industry example, claims for major health incidents consist of numerous and multiple filings by all of the various care providers (doctors, hospitals, anesthesia etc). These claims are received at different times over what can be an extended period of time, which militates against a real-time decision.
Another major obstacle to the real-time enterprise—and perhaps the largest obstacle—is the business entity's level of information technology readiness and the problem of the integration of all of the disparate data and information sources across all levels and functions of the enterprise.
Although solutions exist that endeavor to overcome these aforementioned obstacles, the combined dynamics of these changing business requirements and rapidly evolving technologies cause most solutions and applications to become obsolete soon after their implementation (and, in some instances, prior to their implementation).
In addition, while prior solutions recognize the need to provide to the executives, managers, and other decision-makers critical business metrics or key performance indicators (KPI) on a timely basis, such metrics by themselves do not necessarily provide to the decision-maker the proper viewpoint from which to evaluate the particular situation and make the most informed and effective decision.